UK: Beverage sales in US boost Cadbury profits
Cadbury Schweppes this week reported a rise in sales and pre-tax profits for the half to 19 June, with the company's US beverage division gaining share on its rivals.
Sales in the half were GBP3.127bn, compared with GBP2.954bn in the same period the year before. Profits before tax were GPB344m, compared with GBP312m the year before.
Overall beverages sales grew 4%, with the US beverages business posting operating profit up 4% on a 5% increase in sales due to a combination of new innovation, higher promotional spend, and marketing activity.
The company stated that positive price/mix in US CSDs largely offset the significantly higher promotional spend in US non-carbs.
The company increased its market share in the US 70 basis points to 17.7%. Diet brands grew volumes 11%, whilst Dr. Pepper had a 7% volume increase.
However, European beverages' operating profits declined 6% on a sales decline of 1%. The company said profits were hit by an increase in innovation and marketing and promotional investment behind core brands.
"We've had a strong start to the year as increased investment in growth and focus on innovation and marketplace execution have had a positive impact on our businesses around the world," said CEO Todd Stitzer. "Although the external environment is likely to remain challenging, we will continue to increase investment behind long-term growth and expect to deliver within our goal ranges for the full year."
Looking forward the company said that it expected continued good sales momentum given the focus on innovation and market-place execution, although competitive activity is expected to increase in US beverages in the second half. Margins, Cadbury said, are expected to benefit from increased Fuel for Growth cost savings.
"Although the external environment is likely to remain challenging we will continue to increase investment behind long-term growth and expect to deliver within our goal ranges for the full year," a statement said.
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